What is happening?

Under new superannuation laws, which come in to effect on 1 July 2019, super funds are  required to cancel your insurance cover if no money has been added to your account (eg a contribution or rollover) for 16 continuous months - unless you let them know that you’d like to keep your insurance cover by making an election in writing. The purpose of the new laws are to make sure you don’t pay for more insurance cover than you need, so you can give your super the best chance to grow.
 
If you have ‘inactive’ super accounts with insurances, you have until the end of the 2019 financial year to opt-in to retain your insurance.
 
By now you should have received correspondence from your super fund outlining the opt-in process.
 
What is an ‘inactive’ account, and what are the potential consequences of extended ‘inactivity’?
 
An account is ‘inactive’ where it has not received a deposit for at least 16 months. A deposit would be either a contribution or a rollover.
 
A member’s insurance must be cancelled by their superannuation fund after 16 months of continuous inactivity. 
 
If your super fund became inactive prior to or shortly after 1 March 2018...
 
Your insurance will be cancelled on 1 July 2019 or shortly after, depending on when your last contribution or rollover was made.
 
In the future, opt-in notifications will be sent at 9, 12 and 15 months of inactivity (assuming no response or activity).
 
When should you send the opt-in response if you wish to retain your insurance?
 
If you want to retain your insurance, you should respond prior to 16 months of continuous inactivity. If you have been inactive since 1 March 2018 or earlier, a response must be received by Friday 28 June 2019.
 
After a client opts-in...
 
If you decide to opt-in to retain your insurance, you will not be required to opt-in again in the future. By contrast, contributing an amount to an account only restarts the 16 month period.
 
What if a policy is cancelled?
 
If your policy is cancelled, it may be possible to re-instate the policy without underwriting within a certain period, such as 60 or 90 days. Generally, the insurer will require all missed premiums be paid up. It is important to check with each individual super fund’s insurer to understand whether this is possible, and to understand specific processes and requirements.
 
Do you need your insurance?
 
If you are not sure whether you need this insurance, or need help to keep your insurances please contact our office. 
 
We are here to help and ensure you are protected.
 

If you would like to discuss please call us on 02 9929 6222.